Active trading implies to the act of buying and selling securities on the basis of short-term movements with the aim of making swift profit. As per Kavan Choksi UAE underlines that active trading is in contrast to passive investing where the approach is to buy and hold over the long term. Traders commonly leverage a wide variety of tools and strategies, including fundamental, quantitative and technical analysis. A number of traders also puts a high degree of emphasis on market news and events.
Kavan Choksi UAE briefly discusses active trading
Following the appropriate investment strategies is important for mitigating risks and maximizing returns in the ever-evolving financial markets. Investors across the world consistently explore techniques for enhancing their portfolios and employ distinctive trading techniques that are tailored to their goals. Active trading tends to involve a pretty much hands-on approach where investors try to benefit from short-term price fluctuations through frequent buying and selling of securities. The success of active trading largely depends on understanding market trades and accurately time trades.
As opposed to passive investing that puts emphasis on a buy-and-hold approach, active trading involves quite continuous market participation and significant transaction activity. There are multiple types of active trading strategies followed today, each of them having its distinct time frames:
- Day Trading: This trading style involves executing several trades within a single day, and have positions closed by the end of a trading session. Day traders aim to profit from small intraday price movements. They generally make use of leverage provided by brokers for amplifying their gains. Minimal overnight risk is considered to be a hallmark of day trading.
- Swing Trading: In the case of swing trading, positions are held for multiple days or weeks. Swing traders strive to capture medium term price patterns or “swings” in the market. They largely depend on technical analysis to identify trading opportunities. In many ways, swing trading helps bridge the gap between day trading and long-term investing.
- Scalping: Scalping involves making multiple small profits throughout the day by holding positions for minutes or even seconds. Scalpers think that more frequent trading enables them to accumulate considerably greater profits over time, irrespective of the small individual profit margin of each trade.
Active traders commonly use technical analysis for making trade decisions. This involves studying the past market data, largely the volume and price. They try to identify trends and patterns that suggest future movements by examining historical data. Oscillators, moving averages and Fibonacci retracement levels are among the most commonly used technical indicators. They help traders to make informed exit and entry decisions.
Kavan Choksi UAE points out that prime characteristics of active trading are short holding periods, high trade volume and a focus on discerning technical indicators. The ability of the trader to make swift decisions and respond to market changes significantly impacts the success of active trading strategies. Traders engaging in active trading aim to enjoy superior earnings with the help of smart market timing and strategic decision making. Active trading is especially a good option for traders wanting to harness market volatility to their advantage.
